Glassdoor Economic Research Blog

These Cities Have Recovered Most Since the Recession

This month marks the six-year anniversary since the end of the Great Recession, the most severe economic downturn since the 1930s. Six years later, which American cities have sprung back to life and which cities have lingered?

America’s Recession Rebound CitiesThe table below shows which cities have recovered most and least since the end of the last recession in 2009. The ranking[1] is determined by combining three key economic indicators for each city:

Unemployment: How much the local unemployment rate has fallen;

Jobs: How much has local employment grown (the number of employed workers in the city); and

Wages: How much the average hourly wage in the city has grown.

Note: For complete data, including local unemployment rates, total employment and average hourly wages for each city by year, click on the interactive Tableau table above. Then, click on “download” near the bottom right corner to see the full data.

Winners and LosersThe list of rebound cities is dominated by cities in Texas. Of the 15 most recovered cities, five are in the Lone Star State. Midland, TX tops the list with a 2.7 percent drop in its unemployment rate, 30 percent job growth, and 27 percent growth in its average hourly wage. Midland, TX is followed closely by Odessa, TX, with a 4.6 percentage point drop in unemployment, 26 percent job growth, and 20 percent wage growth.

The third most recovered city is the fast-growing Silicon Valley tech hub of San Jose, CA, which has seen its unemployment rate drop 6.3 percentage points, along with 25 percent job growth and 14 percent wage growth. Rounding out the top five most recovered cities are Greely, CO and Provo, UT.

For America’s least recovered cities, Ocean City, NJ leads the way. In fact, this city’s average unemployment rate in 2015 is 4.9 percentage points higher than in 2009. Similarly, the city has seen a 26 percentage point drop in employment, and only 5 percent wage growth since the end of the recession.

Legacy of the RecessionDuring the 2007-2009 recession, essentially every American city was hit hard. By June 2009, total output in the U.S. economy had shrunk by a whopping 4.3 percent. This sent the unemployment rate soaring to 10.0 percent in October 2009, ushering in years of sluggish wage growth as labor markets struggled to recover.

But some cities were hammered much harder than others. The hardest hit were generally those with the most inflated real estate markets. Home prices fell sharply during the recession, devastating the construction industry. And those falling home prices—along with rising unemployment—sent millions of homeowners into foreclosure. That drop in household wealth led to cutbacks in consumer spending, spreading the recession’s effects throughout the economy.

What This Means for Job SeekersThis ranking offers two big takeaways for job seekers. First is that all labor markets are local. The factors leading to strong job growth in Texas—primarily energy jobs in recent years—have little to do with the lackluster job growth in Ocean City, NJ. Understanding city-level trends means understanding what industries and employers dominate local areas.

Second, although job seekers can’t control economic trends in their city, they can always control what city they call home. The rapid migration away from cities like Detroit and toward cities like Phoenix in recent years largely reflects this type of migration: workers moving away from poorly performing cities toward areas with rapidly growing job markets.

The Recovery IndexIn the 1970s, economist Arthur Okun famously coined the “misery index.” It is the simple sum of an area’s unemployment rate and inflation rate. Lower is better, higher is worse, and it captures the basic short-term tradeoff between inflation and unemployment.

Our “Recovery Index” above follows the same approach. The index is the sum of three factors measuring the health of metro areas: the percentage drop in the unemployment rate, the percentage change in total employment, and the percentage change in mean hourly wages since 2009. A higher index is better, providing a simple way to rank America’s most-recovered cities.

ConclusionThere are many ways to measure the health of a local economy. In this post, we present a new measure we call the “Recovery Index”—a simple sum of percentage changes in unemployment, job growth, and wages since the end of the Great Recession.

Of course, this measure doesn’t tell us everything about the economic well being of cities. For example, it doesn’t tell us whether inequality has grown, or whether sidelined workers have stopped looking for jobs and left the labor force. But it does have the advantage of providing a simple, transparent measure of which metros have snapped back to health over the past six years—and which may still need a helping hand to get back on track.

Footnote:[1] Note: This report is based on data for U.S. metropolitan areas as defined by the U.S. Bureau of Labor Statistics. For simplicity, we use the terms “metro” and “city” interchangeably throughout this report. We include only those metropolitan areas for which BLS data on hourly wages, unemployment rates, and total employment are available for every calendar year from 2009 to the present.

Methodology:All data on local unemployment rates and total employment are from the U.S. Bureau of Labor Statistics’ Local Area Unemployment Statistics program (http://www.bls.gov/lau/). Data on mean hourly wages are from BLS’s Occupational Employment Statistics program (http://www.bls.gov/oes/).

The percentage-point change in local unemployment rates is calculated by comparing each area’s average during 2009 to the average unemployment rate in 2015 (January through April, the most recent month available from BLS). For total employment, we compare each area’s average in 2009 to the average total employment in 2015 (January through April, the most recent month available). For hourly wages, we compare each area’s average mean hourly wage in 2009 to the average in 2014, the most recent year available from the BLS.

The Recovery Index is simply the sum of these three percentages: the percentage-point decrease in the unemployment rate, the percent change in total employment, and the percent change in the average hourly wage since 2009. For example, Midland, TX had a drop in the unemployment rate of 2.7 percent, employment growth of 30 percent, and wage growth of 27 percent. Thus, the Recovery Index for Midland is 0.027 + 0.300+ 0.270 = 0.597 or 0.60 when rounded to the nearest two digits (which is done for simplicity of reporting).

For the list of metro areas, we use all metropolitan statistical areas reported by BLS for which all three data sources were available in all years: unemployment rates, total employment, and mean hourly wages. In some cases, BLS hourly wage data is available only for metropolitan divisions rather than the metropolitan statistical areas used here; in these cases we omit these cities to avoid combining data for inconsistent geographic areas. The full list of metropolitan areas tracked by BLS is available at www.bls.gov.